Progress toward global climate goals is going to have to take more than reducing the use of plastic drinking straws. Local investment firm North Sky Capital is a pioneer in the movement after making profitable investments in projects and companies that have made a dent in sustainability goals.
The Wayzata-based company — which makes sustainable infrastructure investments and also puts money into the impact secondaries market — has been operating quietly for years.
Now that environmental, social and governance (ESG) and impact investing have grown mainstream, North Sky Chief Executive Scott Barrington and his colleagues are more willing to discuss their business.
A 2020 report from US Sif Foundation found that at the start of 2020 the amount of assets managed under sustainable investing strategies had grown to $17.1 trillion, or one in three dollars of the $51.4 trillion in assets in the US under professional management.
Barrington was director of Piper Jaffray Private Capital in 2004 and looking for an investment focus. He found some early work being done in clean and green technologies, improving industrial processes and alternative energy projects.
Barrington saw an “early innovation supercycle” underway that included the development of electric cars, LED lights, biofuels and efficient solar panels. He and his other portfolio mangers were out evangelizing on this growing investment category.
“We were telling people this is a movement, this is coming, this is an investment trend and you should get onboard early because there are a lot of things that are going to happen,” Barrington said.
The sector grew from 15 managers to 50 in 2005. A year later, it had 75 managers, then 300 in 2008, he said.
In 2006, Barrington and his group launched their first impact private equity fund while still at Piper. Prior to that they were investing mainly using a fund of funds approach. The group’s early successes included investments in Elon Musk’s companies Tesla, Solar City and SpaceX.
For regulatory and strategic reasons, the team spun off from Piper Jaffray through a management buyout to form North Sky Capital. The split was amicable and many of those Piper veterans are still with North Sky.
Now the group has two signature styles sustainable infrastructure and impact secondaries.
The firm’s sustainable infrastructure investments have focused on environmental infrastructure (waste to energy projects, water treatment, pollution control systems) , clean power (solar, wind, hydro) and electric grid efficiency and enhancement (energy storage, transmission and grid optimization and stabilization).
“The biggest opportunity we see right now is in the environmental infrastructure,” Barrington said, “…….